ChinaCache Jumps 95% for Biggest U.S. IPO Rally in Three Years

ChinaCache International Holdings Ltd. (CCIH) posted the biggest first-day gain for a U.S. initial public offering in three years, the latest Chinese company to rally after selling shares in New York.

The provider of Internet content to businesses and government agencies rose 95 percent to $27.15 after selling 6.1 million American depositary receipts for $13.90 each, according to data compiled by Bloomberg. Beijing-based ChinaCache, which delayed the IPO for a day, raised $84 million after boosting the deal from 5.5 million ADRs.

The offering came after the number of Internet users in China, the world’s fastest growing major economy, surpassed the entire American population. While Liberty Mutual Agency Corp. this week postponed the biggest U.S. IPO of 2010, China’s SouFun Holdings Ltd. (SFUN) and Country Style Cooking Restaurant Chain Co. (CCSC) have both rallied more than 50 percent since completing initial sales in New York in September.

“You sort of get one hot China Internet play that worked, and then you get investors looking for more deals like that,” said Timothy Cunningham, a manager at Santa Fe, New Mexico-based Thornburg Investment Management, which had $56 billion in assets as of June 30. “If there’s any sort of concern or worry or hiccup about the business, nobody wants to touch it at all.”

Growth Potential

ChinaCache, which serves customers from Beijing-based China Mobile Ltd. (CHL) to Alibaba Group Holding Ltd. in Hangzhou, China, will use the proceeds to finance research and development, fund capital expenditures and for possible acquisitions.

ChinaCache’s shares were sold above the offer range of $10 to $12 a share. Charlotte, North Carolina-based Bank of America Corp. and Deutsche Bank AG of Frankfurt led the offering.

The company’s 95 percent first-day climb was the biggest on a U.S. exchange since Athenahealth Inc. (ANTH) of Watertown, Massachusetts, jumped 97 percent after completing its IPO in September 2007, according to data compiled by Bloomberg.

“It clearly shows the recognition by the investors in the great potential for growth in the Chinese market,” ChinaCache’s Chairman and Chief Executive Officer Wang Song said in a telephone interview. The IPO pricing “exceeded our expectation. It was a good surprise,” he said.

China had an estimated 420 million Internet users at the end of June, an increase of 36 million from six months earlier, according to data from the government-sponsored China Internet Network Information Center. The U.S. population is about 310 million, according to the Census Bureau’s website, while about 231 million Americans have access to the Internet, according to the Washington-based World Bank.

Chinese IPOs

Before ChinaCache’s debut, companies from China accounted for six of the 10 best performing U.S. IPOs this year, data compiled by Bloomberg show.

SouFun, the Beijing-based operator of China’s largest property website, posted the third-biggest first-day gain for a U.S. IPO, surging 73 percent on Sept. 17. Country Style Cooking Restaurant, a fast-food outlet operator located in Chongqing, has climbed 76 percent in four days after raising 18 percent more than initially sought for its IPO.

China Ming Yang Wind Power Group Ltd. (MY), a Guangdong, China-based maker of wind turbines, raised $350 million selling 25 million ADRs at $14, the low end of its forecast range, according to a statement yesterday. The shares retreated 5.4 percent to $13.25 in New York Stock Exchange trading.

“The listing in the U.S. is part of our international strategy and this is the best timing as far as the company is concerned,” China Ming Yang Chairman and CEO Zhang Chuanwei said in a telephone interview. “We are very happy it is listed as planned, on target.”

KEYW, Liberty Mutual

KEYW Holding Corp. (KEYW), the Hanover, Maryland-based company that helps U.S. government agencies collect and process intelligence data, raised $91 million selling shares at the bottom of its forecast range. The stock climbed 14 percent to $11.38 yesterday in Nasdaq Stock Market trading.

Liberty Mutual Agency, the second-largest writer of property and casualty insurance distributed through independent agencies in the U.S., was seeking $1.3 billion for its IPO this week. The Boston-based company’s parent Liberty Mutual Holding Co. cited an “unfavorable environment” for receiving appropriate value as it pulled the deal.

At least 47 companies have shelved or withdrawn U.S. initial sales valued at $11.47 billion this year, the highest amount since 2001, amid concern the recovery from the longest recession since the Great Depression is deteriorating.

Ellington Returns

Ellington Financial LLC (EFC), which postponed a $208 million IPO in December, said in a Securities and Exchange Commission filing this week it will seek to sell 4.5 million shares at $22 to $24 each. The Old Greenwich, Connecticut-based company is run by the hedge-fund firm of Michael Vranos, the former head of mortgage-securities trading at Kidder Peabody & Co.

Six companies are scheduled to raise a combined $1.2 billion through IPOs in the U.S. next week, Bloomberg data show.

Campus Crest Communities Inc. (CCG) is planning to sell $411 million of shares in what would be the biggest IPO of the week. The Charlotte, North Carolina-based student housing developer’s IPO was originally scheduled for earlier this week.

U.S. Federal Properties Trust Inc. of Kansas City, Missouri, a real estate company formed to lease properties to the government, plans to raise $289 million on Oct. 4.

Two Chinese companies are among the six seeking capital through initial offerings. Daqo New Energy Corp. (DQ), the Chongqing, China-based maker of polysilicon materials for solar panels, plans to sell $100 million in shares, while Beijing-based Global Education & Technology Group Ltd., which provides tutoring and test-preparation services, is attempting to raise $67 million.

To contact the reporter on this story: Cecile Vannucci in New York at cvannucci1@bloomberg.net.

To contact the editor responsible for this story: Daniel Hauck at dhauck1@bloomberg.net.

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